Amazon Wins $600 Million CIA Cloud Deal As IBM Withdraws Protest

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It's important to note that the CIA isn't putting its data into the AWS public cloud. Instead, Amazon is building a replica of the AWS public cloud to run in its own data center -- which is basically a private cloud.

Think Big Analytics recently worked with the Nasdaq to build a reference architecture for storing regulated financial data on the AWS cloud. Bodkin sees the AWS-CIA cloud deal "as a similar endorsement of AWS' ability to handle sensitive data sets."

Meanwhile, if AWS were to pursue additional government and enterprise private cloud-type deals, that would put it into more direct competition with VMware, Microsoft and other private cloud vendors.

"Organizations that want to avoid building their own private cloud could benefit from companies like Amazon doing it on their behalf," Tony Safoian, president of SADA Systems, a North Hollywood, Calif.-based cloud services partner, told CRN.

AWS has a significant head start in public cloud IaaS and that business continues to do well. In Amazon's third quarter, North America sales in its "Other" category, which is mostly AWS, grew 56 percent year-over-year to $1.01 billion.

But, public cloud IaaS is an increasingly crowded space. Microsoft, VMware and others are trying to capture the hearts and minds of enterprises that, they believe, prefer to use a public cloud with an enterprise pedigree. Google, which invented a lot of the key technologies that underpin the cloud, is going to eventually start reeling in some big cloud deals of its own.

All of which suggests that AWS moving into the private cloud space would make a lot of sense.

For IBM, which has long been synonymous with large government and enterprise deals, losing the CIA cloud deal to AWS is a wake-up call.

But, it's not like IBM is snoozing on the opportunities in the cloud space: It paid $2 billion in June for public cloud vendor SoftLayer and inked a 10-year, $1 billion cloud deal with the Department of the Interior in August.